Contractors move to save cybersecurity funding

The Pentagon may be slashing its wartime budget as all of official Washington works to avoid the fiscal cliff, but there’s a growing sense that cybersecurity spending might be spared — and some major companies are fighting for the lucrative contracts.

Federal officials have made it clear that funding to fight off foreign hackers should survive the mandatory cuts about to wrack practically every agency in the Beltway. That’s millions in government dollars up for grabs, as Washington rushes to secure its computer systems and the Department of Defense prepares to develop the tools it needs to dominate in cyberspace.

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“We need that capability, and the government alone cannot provide that capability,” said Rep. Mac Thornberry, a Republican cybersecurity leader on the House Armed Services Committee, when asked about the growing cyber spending in Washington.

“We cannot hire and keep and fund the kinds of capabilities that are needed to protect cyberspace. Some of it has to be contracted out, and you have to have the expertise and so forth to do that,” the Texan told POLITICO.

Recognizing the shift in budget priorities, companies like Boeing, Northrop Grumman, Raytheon and SAIC are among many players betting big on cybersecurity. That puts them now in direct competition sometimes against tech firms like IBM and HP to offer the feds their cybersecurity products, personnel, services and solutions.

As they do, some of them are hitting the pavement hard on Pennsylvania Avenue, lobbying aggressively this year to protect — if not expand — what has become for so many firms an important new line of revenue.

“Margins are getting squeezed elsewhere,” said John Slye, who analyzes federal cybersecurity spending for Deltek. He said in an interview that defense companies in particular are “looking to protect their revenue streams,” so they’re snapping up security firms and boosting their cyber expertise as they try to position themselves for the cyber market.

The federal cybersecurity pot is brimming with new dollars: Deltek, for one, expects that government spending on cybersecurity products and services could grow at an annual rate of more than 7 percent between now and 2017, coming in that year at about $14 billion. That doesn’t even include the millions of dollars spent by the Pentagon — often out of public view — to operate in cyberspace.

As new threats emerge, the administration has tried to secure for the Department of Homeland Security and DOD even more cyber aid, and congressional appropriators have mostly fulfilled the requests. While those agencies may lead the way in deterring and responding to attacks, they’re also joined by a slew of other government bureaus with their own pot of dollars that can be used for internal cybersecurity purposes. The State Department, for example, recently solicited bids on a $120 million cyber project for one of its diplomatic missions.

It might be a drop in the bucket compared with other federal spending, particularly at the Department of Defense. But it’s still a boon to the defense industry, which is trying to navigate a world of decreased military spending while dodging the new, threatening ax of sequestration.

“In a time of tight budgets that are impacting spend[ing] across the board, there’s a premium in government investing in tech that delivers the maximum amount of security for an amount of money that is there,” said Thomas Gann, vice president of government relations at McAfee, which offers the feds some cyber help.

And administration officials are making clear those dollars aren’t going away.